The U.S. Federal Reserve has come out with its decision, and aside from some usual Fed decision short term volatility, the market has resoundingly yawned. The U.S. dollar is trading more or less flat when compared to Asian opening hours earlier on Wednesday, with the stock market rallying amid reduced uncertainty.
Looking at the currency market, the move by the Federal Reserve’s Open Market Committee (FOMC) has been met with short term gyrations that haven’t affected brokers in any material way. Fed Chair Janet Yellen has delivered a fairly consistent message throughout her press conference.
It appears that the only way forward for the currency markets going into 2016 is that of broad consolidation and anticipation of future data.
The U.S. dollar is on track to end 2015 on a slightly positive note, but one can expect that most of the good news for the Greenback has been priced in.
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Commenting on the prospect for big currency swings, OANDA’s Market Analyst Craig Erlam said: “With the dollar likely to strengthen in response to the hike, traders will be on red alert come the European open on Thursday.”
“While we can often see some big moves in the markets following these announcements which will appeal to many, our traders also told us that risk management, discipline and being sensible about cash flow were more important than the big win,” he explained.
On its part, the FOMC has reiterated in its statement, that the pace of rate increases is likely to be gradual: “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”
In short, there hasn’t been much new information for the markets to digest. While going into the decision traders were already overwhelmingly bullish on the U.S. dollar, the rate decision is not likely to lead to any major moves in the few remaining days of 2015.